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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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May 4, 2008 1:14 PM

Microsoft drops Yahoo bid: Reaction from around the Web

Posted by Benjamin J. Romano

There's no shortage of punditry and analysis on Microsoft's decision late Saturday to walk away from its proposed purchase of Yahoo. Here's some of the most insightful commentary I've seen so far.

Danny Sullivan, editor-in-chief of, has an in-depth analysis of what this means for Internet search and online advertising. He also takes apart Microsoft CEO Steve Ballmer's attack, in this letter, on Yahoo's potential search advertising partnership with Google. I'd consider this post a must read for anyone following the industry.

An excerpt:

"How long does Microsoft get? At what point does Microsoft seem to be pushing the O/S 2 to Google's Windows, the operating system that's just never going to catch on? Five years doesn't sound that long until you consider that Google itself isn't even 10 years old. With everything Microsoft's put into search, how has it managed to achieve less than Google has, in terms of marketshare, in that period of time?"

Long-time Microsoft watcher Mary Jo Foley, who has just published a book on what's next for Microsoft after the Bill Gates era, says "Microsoft's decision to walk restores my faith in the future of the company. ... There are so many other things Microsoft could do with $44 billion -- both in the online ad market, as well as in making sure its other non-services-centric businesses remain solid."

Mini-Microsoft, the anonymous employee blogger, is elated that the company isn't going forward with the deal, as are many of his commenters.

However, Mini is circumspect about one outcome of not spending up to $47 billion on Yahoo: "[W]e'll continue to live in an era of cash-cow abundance, preventing us from making profit-minded decisions. The lack of the money cushion would have, I presume, actually caused new projects to expect to bring in cash vs. becoming strategic money pits."

TechCrunch is speculating on whether this might be the beginning of the end for Ballmer at Microsoft. It paints a pretty gruesome scene, and is thinly sourced ("according to one secondhand account that leaked to us yesterday before the deal was called off"), but is just one of many such post-mortems we'll see this week.

An associated poll had received nearly 2,000 votes by mid-afternoon Sunday. Just over half the respondents said it's too early to tell what the end of the Yahoo deal means for Ballmer's career; 27.5 percent said he saved himself by walking; 22 percent expect him to be asked to leave.

What do you think?

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Posted by Harry

3:45 PM, May 04, 2008

MSFT should go acquire a bunch of companies and innovate. Why Yahoo! again? Yahoo! is overrated. A microhoo may look like a good thing in the short term but it would be disastrous for Microsoft especially. Microsoft needs to get its act together with tie-ups with AOL etc.

Posted by Scott

4:18 PM, May 04, 2008

Yahoo is no where near worth 44 billion dollars. MSFT will sit back, let Yahoo's value drop then scoop it up at a bargain.

Posted by Jack

5:25 PM, May 04, 2008

If MSFT had gone through with this deal, it would have crushed them. This would have been the Time Warner/AOL deal of this decade. Everyone seemed to know this was a bad deal from the beginning, good to see it finally trickled up to the execs. Invest that money in making a good search engine and keep out the clutter and you'll do fine MSFT.

Posted by tjp

5:30 PM, May 04, 2008

What percentage of the 1% of the people in this area actually give a damn?

Posted by geon

5:59 PM, May 04, 2008

A win for Yahoo!

Posted by davem

6:20 PM, May 04, 2008

Ballmer managed this perfectly. Yahoo was interesting, but not THAT interesting

Posted by Marina

6:29 PM, May 04, 2008

Microsoft is incapable of creating their own search and online advertising solution and will continue to fail at it due to their company culture and mindset, which is driven by Ballmer. So until he leaves MSFT, there is no chance that they can legitimately compete with Google. IMO, the purchase of Yahoo! is their BEST opportunity for success but if they do buy them, the most likely outcome will be top notch employees at Yahoo! leaving because of Microsoft's caustic work environment.

Posted by Turkey trots

7:30 PM, May 04, 2008


Posted by bigmaq

8:07 PM, May 04, 2008

Think Gestalt MSFT board. MSFT should be split up into three divisions. 1 windows 2 Biz services 3 Internet/games and all rest. The sum of these three parts will be greater than today's total.

Posted by Matt

8:26 PM, May 04, 2008

By retracting their bid, Yahoo's stock will should drop immediately. Yahoo's value has been inflated because of the speculation of a Microsoft buyout.

Posted by Ned

9:55 PM, May 04, 2008

I think Microsoft should buy Boeing and make Microjets. We can sell them to China and ship them via Outlook.

Posted by Frogmandude

10:07 PM, May 04, 2008

See what happens if you look a gift horse in the mouth. The horse will walk away and leave you with nothing. Boo-hoo Yahoo. Now is the time for Microsoft make that 44 mil work for them. You go Billy boy.

Posted by Steve in Bellevue

10:48 PM, May 04, 2008

I think Microsoft's purchase of Yahoo would have been a disaster. I, for one, would have stopped using Yahoo if the purchase had gone through.

I believe Microsoft already has WAY too much power in the technical world and I'm not going to participate in adding to it.

Posted by CougA Nator

1:32 PM, May 05, 2008

Hallelujah! This was a waste of money anyway. Yahoo is on the decline and has been for some time and the cultures would never mix. Let them crash and put even half that amount into their own search technology and they can easily be better off than buying a crusty old has been.

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